Main providers of HEM services

Source: Melody Lin

Date: 2015/07/23

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While smart home market is divided into DIY and professional installation categories, DIY is a comparably cost-amiable way in the eyes of most end users. Professional service providers are expected to gain more advantages with the backup of powerful HEM systems in the long run.

Utility companies

As the cost of acquiring energy from conventional sources gets higher, and the concerns surrounding nuclear power continue to grow, utilities under political and economic pressure have to find their way out of the predicament. Actions, such as increase in renewable energy usage and demand response (DR) programs, have been taken all over the world. Pilot projects of Bring Your Own Thermostat (BYOT) are a good example of how utilities can leverage DR programs to control peak loading: via these projects, users can acquire smart thermostats and HEM services for free or at very low price, which may attract more people to join.

According to David Drew, director of business development at Emerson Climate Technologies, Austin Energy has collaborated with vendors to attract consumers to enroll in a BYOT program in which they can buy smart thermostats from certified contractors or retailers and receive an $85 rebate for it. Under this mutual agreement, consumers can enjoy the convenience of HEM at a low cost, or even for free. However, when DR is required, the utility company can exert control over these gadgets to shift peak loading.

Moreover, for utilities who face serious competitions, improved services are quite crucial for delivering an improved offering. “Utilities have the supply side of the energy equation, but the demand side is equally important. With improving technology, utilities are increasingly able to exert greater control over the demand side with customer friendly services like those from EcoFactor,” observed Philip Dawsey, senior marketing manager at EcoFactor. Providing home energy management services like this allows utilities to learn more about their customers and better understand how various groups use energy. It also allows utilities to provide customers with advice and insight into their energy consumption, which should drive behavioral change.

Holger Knöpke, vice president of Connected Home at Deutsche Telekom illustrated how utilities can actively engage themselves into HEM via partnering with software/platform providers. “Many utilities have joined the QIVICON smart home platform already. They include EnBW and Vattenfall – two of Germany’s big four electricity providers. We also cooperate with regional utilities like RheinEnergie and Entega. Three of these four utilities already offer their customers their own APPs and own smart home packages based on different business models.” With these HEM software and hardware, now utilities are capable of playing dual roles – energy supplier and service provider. New services are coming along, such as providing visualized power consumption data for households, or giving consumers explanations why they consume more power than their neighbors, based on data analysis and comparison.

Home service providers

According to Icontrol Networks, whose platform has been utilized by ADT (Pulse), Comcast (Xfinity Home) and iTSCOM (Intelligent Home), home service providers usually emphasize on home automation and security rather than energy management. But having accumulated abundant knowledge about user experience, home service providers undoubtedly have recognized the traction of cutting energy cost as well, and therefore HEM can be regarded as a value added feature added to their smart home packages.

“Home service providers are not energy generation and grid balancing experts, but they do have expertise marketing to end users, installing devices in the home, and providing service to end users,” said Dawsey. “These home service providers' competencies are highly compatible with what utilities need when rolling out new services such as home energy management to homeowners. Partnership is certainly a model we expect to see more of when utilities roll out this type of program.”

Due to the integration of connected devices on a platform, HEM, such as automated control over HVAC and lighting, can be delivered along with other services, since home automation, security and energy management can be combined in a bundle in terms of smart home.

Energy aggregators

Although DR is useful in shifting peak loading, it remains a heavy burden for some utilities to deploy devices for real-time data gathering themselves, which leaves room for energy aggregators to intervene. An aggregator can negotiate with utilities on behalf of a certain number of end users in the purchase of energy. At the same time, it can persuade end users to agree to join DR programs that benefit utilities.

“Aggregators can directly provide HEM services and devices to home users, helping them reduce energy consumption, while utilities can collaborate with aggregators or buy services from them,” explains Jason Liao, product marketing manager of Power & Energy Management Division at Billion Electric. “When utilities need to carry out DR programs, aggregators then have to reduce the demand via their HEM applications.”

For now, DR has been one of the motivations that push utility and HEM markets to evolve. Manufacturers and home service providers, such as Energy Pool and Comcast, are aiming at playing the role as energy agents. And to be a qualified aggregator, these companies have to partner with software/plat form or hardware providers to develop powerful HEM solutions.

Retailers & DIY lovers

To end users who care about high energy bills but do not want to spend too much on subscribing HEM services, single-point products may be a better starting point for them. In the US, most home users acquire their thermostats mainly via national or local retailers, and secondly, from online-only retailers, according to Parks Associates' research on the smart thermostat market.

But as Drew pointed out, customer satisfaction would be a challenge in the DIY market. “99% of people would encounter an installation problem, for sure!” In fact, the key point for DIY products to prevail lies in the user-friendliness and cost effectiveness, but the difficulties users encounter during installation process have hindered the growth of DIY to certain extent. About the dilemma occurring in DIY market, Dawsey also observed, “DIY programs often ramp up more slowly since there's often no centralized outreach campaign and customers don't learn about the program or don't want to expend the effort required to make the change. Asking a customer to go buy the thermostat, install it, request a rebate, etc. is not something most people really want to do.”

That is why many hardware providers would rather go both ways, offering their products to professional installers and retailers simultaneously. HVAC vendors or retailers can also address customer needs by giving purchase recommendations and installation services. For example, if a user is looking for a new air conditioner, a vendor/retailer can suggest him/her to sign a contract for HEM services with good terms. The user may agree to it and leave the trouble of installation to the vendor/retailer. For now, this kind of business model is uprising in the retail market.